KRN Admin

July 27, 2020


Not for distribution to U.S. news wire services or dissemination in the United States.

SASKATOON, SK (CNW- July 27, 2020) – Karnalyte Resources Inc. (“Karnalyte” or the “Company”) (TSX: KRN) announces that it has engaged MNP LLP (“MNP”) as an independent strategic consultant to advise the Board of Directors as it determines the long-term strategic direction of the Company. The Company also announces that it has appointed Christie Gradin, CPA, CA, as Interim Chief Financial Officer (“CFO”). In addition, Karnalyte announces that pursuant to a requisition received from a dissident shareholder group, it will hold a special meeting of shareholders (the “Meeting”) on December 15, 2020.


As previously announced, Karnalyte’s Board of Directors (the “Board”) has initiated a strategic review process to evaluate a broad range of potential strategic alternatives available to it including the evaluation of its existing and future projects, and the analysis of potential financing alternatives, with a focus on determining what is in the best interests of Karnalyte and maximizing value for all of its shareholders. To assist in this process, and after thoroughly considering proposals from national and global firms over the past few months, the Company has engaged MNP, a leading Canadian accounting, tax and business consulting firm, as its strategic advisor. MNP has extensive experience in the potash and nitrogen industries, including in-depth knowledge of the Saskatchewan area. In addition to assisting with the evaluation of a range of strategic alternatives, MNP will provide an independent review of the pre-feasibility study Karnalyte recently completed on its Proteos Nitrogen project. The Company has established a project steering committee consisting of the two independent directors currently on its Board who will consider, evaluate, and make recommendations on the various strategic alternatives. Karnalyte does not intend to disclose developments with respect to the process unless and until the Board has made a determination or otherwise determines that disclosure is necessary or appropriate.


Karnalyte is pleased to announce that Christie Gradin, CPA, CA has been appointed as Interim CFO, effective July 27, 2020. Ms. Gradin brings extensive expertise, business acumen and senior financial management experience and will provide important support as the Company navigates its strategic review process. Karnalyte’s current CFO & Interim CEO, Danielle Favreau, will continue in the role as Interim CEO and Christie Gradin will assume the CFO responsibilities. The Board determined that maintaining an Interim CEO position and an Interim CFO position was appropriate at this time until the strategic review process is completed and permanent appointments can be made based on the future needs of the Company.

Christie Gradin, CPA, CA has held numerous senior financial and management positions in both private and publicly traded Companies. Most recently she served as the Director of Finance and Administration at SED Systems, a division of Calian Inc. She also has experience in the insurance and financial services industries. Ms. Gradin is currently the CEO of Christie Gradin, CPA P.C. Inc., providing CFO services to multiple organizations and industries. Ms. Gradin has a Bachelor of Commerce degree from the University of Saskatchewan and a Masters of Professional Accounting, and is a Chartered Professional Accountant, Chartered Accountant.


Karnalyte held its most recent annual meeting of shareholders on June 26, 2020 (the “2020 AGM”), at which each director received over 80% support of the votes cast. Less than two weeks following the 2020 AGM, the Company received a requisition for a special meeting of shareholders from the following three shareholders: Peter Mason, Greg Szabo, and Mark Zachanowich (the “Dissident Shareholders”). The Dissident Shareholders together own not less than 5% of the Company’s issued and outstanding common shares, are all prior members of Karnalyte’s Board, and per the Dissident Shareholders’ July 7, 2020 press release, “In early 2019, the [Dissident Shareholders] found themselves offside Karnalyte’s Code of Business Conduct, took responsibility for their actions, and resigned from the Board as the appropriate and ethical course of action.” The Dissident Shareholders are asking Karnalyte shareholders to increase the Board size to six and appoint four of their nominees and two nominees from Karnalyte’s largest investor and strategic partner that holds approximately 38% of the Company’s shares, Gujarat State Fertilizers and Chemicals Limited.

Subsequent to submitting their requisition, the Dissident Shareholders have made a number of statements regarding the Company, its Board, and its management. Karnalyte believes many of these statements to be misleading or demonstrably false, and will respond to some of them before the Meeting. Certain allegations the Dissident Shareholders publicly released on July 22, 2020, despite being unproven at this time, require a careful and fair review, which Karnalyte has initiated. The Company intends to report on the results of the review when it is completed and does not intend to comment on the status of the review until that time. Shareholders should expect that there will be financial costs associated with the conduct of the review and the engagement of professional advisors to ensure that an impartial process is followed.

The Board has set the date for the Meeting for December 15, 2020. Karnalyte respects the rights of all its shareholders. The Board chose that date in the best interest of Karnalyte and all of its shareholders, having taken into consideration several factors, including that the 2020 AGM was held a mere month ago, that to make an informed decision at the Meeting shareholders would benefit from the information gained following the strategic review and the internal review of allegations made by the Dissident Shareholders, and the costs of holding an additional meeting. At this time, the Company estimates that the Meeting will result in a minimum additional unexpected cost to the Company of $50,000. Shareholders should also expect an increase in legal and other costs as the Company addresses the Dissident Shareholders’ allegations.

The Board has fixed November 10, 2020 as the record date to determine which shareholders will be entitled to vote at the Meeting. In advance of the Meeting, shareholders will receive a management information circular that will include more information about the matters to be presented, and how to vote, at the Meeting. Shareholders should read that information carefully before deciding how to vote. There is no need for shareholders to take any action at this time.


Karnalyte Resources Inc. is a development stage company focused on two fertilizer products, potash and nitrogen, to be produced and manufactured in Saskatchewan. Karnalyte owns the construction ready Wynyard Potash Project, with planned phase 1 production of 625,000 tonnes per year (“TPY”) of high grade granular potash, and two subsequent phases of 750,000 TPY each, taking total production up to 2.125 million TPY. Karnalyte is also exploring the development of the Proteos Nitrogen Project, which is a proposed small-scale nitrogen fertilizer plant with a nameplate production capacity of approximately 700 metric tonnes per day (“MTPD”) of ammonia and approximately 1,200 MTPD of urea, and a target customer market of independent fertilizer wholesalers in Central Saskatchewan.

For further information, please contact:
Danielle Favreau
CFO & Interim CEO
Karnalyte Resources Inc.
1(306) 986-1486


Certain information included in this press release is forward-looking, within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “plan”, “intend”, “forecast”, “future”, “guidance”, “may”, “predict”, “project”, “should”, “strategy”, “target”, “will” or similar words or phrases suggesting future outcomes or language suggesting an outlook.

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Karnalyte, including, without limitation, assumptions as to: projected economics for the Company’s planned potash production facility, the confirmation in an independent feasibility study of Karnalyte’s assumptions regarding the technical and economic viability of the Proteos Nitrogen Project, the ability of Karnalyte to obtain financing on terms favourable to the Company, and the ability of Karnalyte to receive, in a timely manner, the necessary approvals from the Company’s board of directors, shareholders, regulatory authorities, and other third parties.

Karnalyte believes the expectations and assumptions upon which the forward-looking information is based are reasonable. However, no assurance can be given that these assumptions and expectations will prove to be correct. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Without limiting the generality of the foregoing, readers are cautioned that the Company has not received a feasibility study prepared by a third party with respect to the Proteos Nitrogen Project.

Actual results may vary from the forward-looking information presented in this press release, and such variations could be material. Risk factors and uncertainties could cause actual results to vary from the forward-looking information in this press release. Additional information on forward-looking statements and other factors that could affect Karnalyte’s operations and financial results are included in documents on file with Canadian securities regulatory authorities and may be accessed through the Company’s profile on the SEDAR website (www.sedar.com).
These forward-looking statements are made as of the date hereof and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Company assumes no obligation to update or revise them to reflect new events or circumstances.